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Effect of gold mining on income distribution in Ghana

Author

Listed:
  • George Adu

    () (The Nordic Africa Institute, Uppsala University)

  • Franklin Amuakwa-Mensah

    () (Department of Economics, Swedish University of Agricultural Sciences)

  • George Marbuah

    () (Department of Economics, Swedish University of Agricultural Sciences)

  • Justice Tei Mensah

    () (Department of Economics, Swedish University of Agricultural Sciences)

Abstract

This paper examined the effect of mining on household income and welfare and how such effects are distributed over different quantiles of income and welfare. Using the three most recent rounds of the Ghana Living Standards Surveys together with information on the location of gold mines during the survey years, we estimated effects of living in a mining area on real gross income, employment income, and real per capita household expenditure (a proxy for welfare) using average and quantile treatment effect models. We find robust evidence of negative effect of mining on household income and welfare. Our results also indicate that the income reducing effect of mining activity falls heavily on households at bottom of the income distribution. In the case of household welfare, the interesting revelation from our result is that the negative effect of mining falls largely on both the lower and upper ends of the welfare distribution, with much heavier burden at the lower relative to the upper tail. Our paper, thus, provides ample evidence that mining activity does not only reduce income and welfare, but further increases inequality in the distribution of income and welfare.

Suggested Citation

  • George Adu & Franklin Amuakwa-Mensah & George Marbuah & Justice Tei Mensah, 2016. "Effect of gold mining on income distribution in Ghana," Working Papers 2016.23, FAERE - French Association of Environmental and Resource Economists.
  • Handle: RePEc:fae:wpaper:2016.23
    as

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    File URL: http://faere.fr/pub/WorkingPapers/Adu_Amuakwa-Mensah_Marbuah_Mensah_FAERE_WP2016.23.pdf
    File Function: First version, 2016
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    References listed on IDEAS

    as
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    Cited by:

    1. Pokorny, Benno & von Lübke, Christian & Dayamba, Sidzabda Djibril & Dickow, Helga, 2019. "All the gold for nothing? Impacts of mining on rural livelihoods in Northern Burkina Faso," World Development, Elsevier, vol. 119(C), pages 23-39.
    2. Zabsonré, Agnès & Agbo, Maxime & Somé, Juste, 2018. "Gold exploitation and socioeconomic outcomes: The case of Burkina Faso," World Development, Elsevier, vol. 109(C), pages 206-221.

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    More about this item

    Keywords

    Gold mining; Income and welfare distribution; Quantile treatment effect; Ghana;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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